Bank of America (BofA) analysts provided insight into currency market trends, noting the pair’s significant gain last week. The keen augment was attributed to a tender US Consumer Price Index (CPI) report. BofA signals indicate that the euro’s upward trend against the US dollar is likely to continue.
The bank’s analysis pointed to option flows that indicate continued demand for USD put options, suggesting investors are betting on a weaker dollar. Additionally, the BofA technical matrix revealed signals of a continued downtrend for the USD compared to major currencies such as the euro (EUR), British pound (GBP) and New Zealand dollar (NZD).
Despite the positive trend on EURUSD, BofA warned that the dynamics of risk increases may not be so high in the future. Analysts observed that the index (DXY), which measures the dollar’s strength against a basket of currencies, managed to close above the 200-day elementary moving average (SMA), indicating a potential slowdown in the dollar’s decline.
Additionally, BofA economists noted the absence of significant market-impacting events in US macroeconomic data expected this week. Without recent downward catalysts for the USD, the currency’s downward trend may not continue at the pace seen last week.
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